Trading under the influence costs U.K. futures broker

The Financial Services Authority (FSA) has fined Steven Noel Perkins, a former oil futures broker, £72,000 for market abuse. The FSA has also banned Perkins from working in the financial services industry on the grounds that he is not a fit and proper person.

Perkins was an oil futures broker whose job was to trade orders on an execution only basis in Brent Crude Futures contracts (Brent) on the ICE Futures Europe exchange (ICE) for his firm's clients. Perkins' employer, PVM Oil Futures Ltd, did no proprietary trading, but in the early hours of the morning on Tuesday 30 June 2009, Perkins traded on ICE without any client authorisation. He traded in extremely high volume in the ICE August 2009 Brent contract and in doing so accumulated a long outright position in Brent in excess of 7,000 lots (representing over 7 million barrels of oil).

As a direct result of Perkins' trading, the price of Brent increased significantly. Perkins' trading manipulated the market in Brent by giving a false and misleading impression as to the supply, demand and price of Brent and caused the price of Brent to increase to an abnormal and artificial level.

In sanctioning Perkins, the FSA has also taken into account the fact that Perkins initially lied repeatedly to his employer in order to try and cover up his unauthorised trading.

Perkins' trading seems to have been a consequence of extremely heavy drinking resulting from alcoholism, which he now acknowledges. He drank excessively over the weekend prior to 29 June and throughout Monday 29 June.

Immediately following this incident, Perkins joined a rehabilitation programme for alcoholics and he has stopped drinking. The FSA considers that it is possible that Perkins may be rehabilitated over time and may be fit and proper again in the future. The ban has therefore been limited to a minimum term of 5 years.

Alexander Justham, director of markets at the FSA, said:

"The FSA views market manipulation extremely seriously. Perkins' trading caused disruption to the market and has been met with both a fine and prohibition. This reinforces the fact that a severe sanction will apply in cases of market manipulation, even where no profit is made.

"Perkins' drunkenness does not excuse his market abuse. Perkins has been banned because he is not a fit and proper person to be involved in regulated activities and his behaviour posed a risk to the proper functioning of the market."

In determining the appropriate amount to fine Perkins, the FSA took into account his financial circumstances. Perkins’ behaviour merits a penalty of £150,000, but because this level of fine would cause Perkins serious financial hardship, this has been reduced to £90,000. Perkins also agreed to settle this case and therefore qualified for a 20 per cent discount under the FSA's executive settlement procedures.

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